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THE BULL MARKET
The current bull market began in late 2022, and the S&P 500 has returned roughly 129% since then. Every major dip has recovered quickly, reinforcing the belief that buying every decline is easy money. Retail investors are now buying down days at record levels, while the S&P 500 has averaged about 14.8% annually since 2009, far above its long-term average.
THE LOST DECADE
Markets do not always recover quickly. After the 1929 crash, the Dow took more than 25 years to regain its previous high. From 1966 to 1982, inflation-adjusted returns were disastrous, and from 2000 through 2009, $10,000 invested in the S&P 500 actually fell to roughly $9,089 including dividends. Japan took more than 34 years to regain its 1989 peak.
VALUATIONS ARE EXTREME
Stocks are more popular than ever, with roughly 33% of American household wealth invested in equities. The Shiller CAPE ratio recently reached about 41, its highest level since 2000, while the 10 largest companies make up around 39% of the S&P 500. Margin debt is also at record levels, increasing the risk if markets reverse.
Several major firms expect weaker returns ahead. Vanguard projects roughly 4% to 5% annual returns for U.S. stocks over the next five to ten years. Goldman previously projected just 3% annually before later increasing its estimate, while GMO has forecast negative real returns for U.S. large-cap stocks. High valuations are the main concern.
Others remain optimistic. Deutsche Bank, Morgan Stanley, and Yardeni have raised S&P 500 targets, supported by strong earnings growth and nearly $8 trillion sitting in money-market funds. Historically, the average post-WWII bull market lasted roughly 5.6 years and gained about 167%, meaning the current bull market is not unusually old yet.
EXPERTS CAN BE VERY WRONG
Major investors predicted further crashes in 2020 and 2022, only for markets to rally dramatically afterward. Some of the strongest opportunities have historically appeared when sentiment was most pessimistic. The lesson is that even highly respected investors cannot reliably predict tops, bottoms, recessions, or future returns.
THE CRASH TEST
A lost decade is much less damaging when you are diversified. From 2000 through 2009, the S&P 500 lost money while bonds nearly doubled and gold performed extremely well. Owning international stocks, bonds, cash, real estate, or other assets can reduce the risk of being completely dependent on one market.
KEEP INVESTING
Trying to time the market can be extremely costly because many of the best days happen near the worst days. Historically, after the 15 worst 10-year periods for the S&P 500, the following decade was positive every time. Maintaining income, continuing to invest, and avoiding panic selling may matter more than predicting what happens next.
SURVIVE THE NEXT DECADE
The market could continue rising as earnings grow into today’s valuations, or stocks could spend years moving sideways. The biggest danger is investing so aggressively that a prolonged decline forces you to sell. Diversification, liquidity, manageable risk, and realistic expectations matter because you do not need to predict the next decade. You simply need a portfolio capable of surviving it.
Timestamps:
00:00:00 – Intro: The Rude Awakening
00:01:32 – The 2026 Bull Market
00:03:08 – The Lost Decade
00:05:51 – Protecting Your Data
00:07:40 – Bull vs Bear Case
00:11:09 – The Market ‘Crash Test’
00:13:39 – My Thoughts / How To Prepare
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*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice.
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